It may be months before the monetary policy committee (MPC) actually cuts rates and RBI governor Urjit Patel said it is not changing the monetary policy stance of ‘calibrated tightening’ since growth is expected to remain healthy for the rest of the year.

“If the upside risks we have flagged do not materialise, or are muted in their impact in incoming data, there is a possibility of space opening for commensurate policy action by MPC,” Patel told reporters. “MPC is of the view that incoming data will ascertain the durable nature of inflation softening and allow better judge- ment on future policy action. Hence, given the assessment that growth is likely to remain healthy for the rest of the year, MPC retains its stance at ‘calibrated tightening’ so as to buy time to pause, reflect and undertake future policy action with more robust inflation signals.”

The central bank lowered inflation forecast for the second straight time on Wednesday, projecting a rate of 2.7-3.2 per cent in the second half, from the 3.9-4.5 per cent forecast during the previous policy meet.

For the first half of FY20, inflation is projected at 3.8-4.2 per cent, with risks tilted to the upside.

Since October, global crude oil prices have slumped about 30 per cent, reducing India’s oil import bill and bringing down domestic fuel prices. The benchmark bond yield has dipped 50 basis points since then. The Federal Reserve, too, is seen restraining the pace of rate increases next year as growth in US slows. Retail inflation, as measured by the Consumer Price Index, was at 3.31 per cent in October, compared with 3.7 per cent in September.

The central bank also ruled out any special liquidity window for non-banking finance companies, saying the liquidity situation has been managed to reflect normal market conditions. However, the regulator promised to act if the situation goes out of hand, which appears remote at this point.